Consolidation, need for increased engagement helping drive trend
Sept. 18, 2015
By William Ehart
With market changes forcing shifts in membership models, approaches that meld organizational and individual members are increasingly gaining currency among trade associations, professional societies and other tax-exempt groups.
The $8 million-revenue Clinical & Laboratory Standards Institute, of Wayne, Pa., opened to individual members in 2013. Among several reasons: industry consolidation.
“Many of our customers are consolidating, in the pharmaceutical industry, in hospitals, everywhere,” said Glen Fine, chief executive of the group since 1994. Fewer companies mean fewer organizational members. In addition, the standards-setting group wanted to retain the expertise of retired medical professionals.
“We have emeritus members and other highly engaged professionals who are no longer employed but were still very valuable and engaged in our process, and times are changing and more and more people wanted to join as individuals,” he said.
CLSI also offers tiered membership based on desired benefits, access and participation levels.
Several experts told CEO Update of rising interest in hybrid models, including Dean West, founder of Chicago-based consulting firm Association Laboratory, who worked with for CLSI during the change.
“We are seeing customized models based on price—discount, value, premium—and we are seeing mixed models that target both organizations and individuals simultaneously,” West said.
An evolving marketplace is driving the changes, he said.
“Market-centric means allowing people to choose what they want within their membership,” he said. “We let the market tell us what the membership category should be. We don’t create a membership category and try to sell it. You’re seeing a lot of experimentation with membership models because people are attempting to customize to market needs instead of just, ‘OK, everyone who has a whatever behind their name is eligible.’”
Steven Worth, president of Plexus Consulting Group, and JP Moery, president of The Moery Company, said hybrid membership keeps more people engaged in associations.
“If a company has to lay off employees and they have been active in your association, then if you’re a corporate model you’re going to lose those members,” Worth said. “But if they can transfer over and become members as individuals then they can continue to be involved in the organization under a different guise.”
But Worth said such changes need to be done carefully.
“It’s slightly complicated in the sense that you have to have two distinct lines of activity. Corporate members don’t want people at their meetings who are looking for jobs, so you need lines of activities or events that are designed specifically for those two membership categories,” he said.
“The disadvantage of the corporate model is that you need to be very aggressive in making sure that the people who benefit, or should benefit, are actually engaged.
“They need to be reporting back to their corporation that this has been valuable for them, because otherwise when it comes time to renew, if the people who are signing the checks haven’t heard it’s been beneficial, they’ll simply not sign the check,” Worth said.
Moery said corporate memberships might not reach all potential customers in an organization.
“I’ve always seen as an Achilles’ heel of the association model that you don’t reach deep enough into the company,” he said. “You’ve got the CEO, the guy who writes the check and the lady in charge of government affairs, but we know there are more people in that company who could benefit from the services the association provides.
“The ability to reach deeper into the company membership is good for overall member retention, because we’ve all heard the story where the CEO leaves, the successor is promoted from within, and he’s never been exposed to the association, and he gets the five-figure renewal check and he goes, ‘What the heck, and oh, by the way, I never got to go to any of that stuff anyway,’” Moery said.
Setting a market price
The Chicago-based Metals Service Center Institute has moved to market pricing, with a base level of dues and à la carte services above that.
“Let the customer choose from a portfolio of products and services and let them choose how they intend to spend their association levels beyond dues,” CEO Bob Weidner said.
“Everybody had a different touch point of perceived value in the trade association,” he said. “Some use us a lot for professional development and executive education, some like to attend conferences and they get value in networking and hearing content from the podium. Other members see value in our proprietary data.”
MSCI also has tiered membership levels, and has opened to affiliate members. The latter move has generated more revenue and made the group’s events more valuable by expanding networking opportunities.
“If you’re more inclusive, you should be attracting more companies that have a vested interest in your value proposition,” he said.
“The greatest cost of membership is an individual’s time,” Weidner said. “The forums we provide are the most efficient use of their time” because they can interact with competitors, suppliers, customers and others.
Affiliate members include equipment makers as well as major investment banks, which pay for access to industry data.
“We consciously made a decision that our conferences would be priced to market, they are not cost-plus,” Weidner said. MSCI benchmarks the cost against those of similar industry events.
MSCI’s annual revenue has grown to $10 million, from $4 million 12 years ago, despite industry consolidation. Only half of its revenue comes from membership dues, also a big change from 2003. (Weidner became CEO in 2001, and launched the group’s growth strategy two years later.) Affiliate membership has grown from zero to 85 members, representing 12 percent of revenue.
Membership is not dead
Despite all the changes, the idea that membership is dead is flat wrong, Association Laboratory’s West said.
“Membership as a strategy is wildly successful,” he said, adding that corporations are emulating the model. “You may hear people talk about the death of membership, but there’s no evidence in the marketplace that that’s occurring. It doesn’t matter what kind of model you have if what you provide sucks.”
Millennials, too, will ultimately join at rates comparable to Baby Boomers, he said.
“It’s not that they don’t join because they have different views about joining,” West said. “They do not join because they’re young. As they progress through their industries and professions, they will join organizations in the same way their forebears did.”
Moery and Worth said chapters are becoming more important.
“The whole idea of joint membership or collaboration with state associations continues to come up from members’ perspective,” Moery said.
“It’s easier to get face to face, more cost-effective to get face-to-face education, it’s easier to network” at the state level, he said. “The national association has the benefit of influencing Washington, the ability to deliver more online content and education and to cut deals with vendors for discounted services.”
Moery said he conducts focus groups with members of client organizations.
“There’s an opportunity here for associations to consider joint membership programs. The fact is the state association may be better suited to having boots on the ground and recruiting. But the value proposition by adding the national makes the whole thing more robust,” he said.